Au-Wire Interview With Corey Dias, CEO of Anfield Resources19 Mar 2014
Interview With Corey Dias, CEO of Anfield Resources– Uranium & Copper Junior on the Move
There has been a string of important news releases from Anfield Resources [ARY.V] [EXEQF] this year. Perhaps few as important as the March 18th press release. Please click on link. With this announcement, Anfield is taking its uranium strategy to the next level, with the real possibility of actual production as soon as 2h 2015. This is a major step, but is dependent upon further drilling and underlying uranium prices. Yes, this remains a highly speculative stock, investors are urged to do proper due diligence…NOTE: Interviewer and author, Peter Epstein, owns shares of Anfield Resources.
Anfield is more than just a copper or uranium play, it’s both. It has near-term and longer-term prospects in the U.S. and is already in production of copper in Chile. Having just raised about C$700k, the company has approximately 18 million shares outstanding and zero debt. After Tuesday’s announcement, I caught up with Corey Dias, CEO of Anfield Resources to learn more about the company.
Mr. Dias, thank you for your time. Can we start with a high-level overview of Anfield Resources?
Anfield Resources [ARY.v] / [EXEQF] is a mineral development company with a focus on acquiring strategic resource projects in order to primarily generate near-term cash flow. At the moment, the Company has both copper (Chile & Arizona, U.S.) and uranium assets (Utah & Arizona) in its portfolio. These projects are also at differing stages of development: small-scale copper production in Chile, later-stage uranium asset development (with expected near-term production) in Utah, and development-stage copper and uranium projects in Arizona.
Great. You mentioned possible near-term production of uranium in Utah, and of course Anfield put out a press release on this score yesterday, March 18th. Please explain.
We announced that we had not only identified a claim group, the Firefly Mine Complex, with significant production potential, but the claim group that will serve as our first initial production target. We had originally only staked eight claims in this area but, after further investigation, decided to expand it to 55 in order to encompass three past-producing uranium mines. We feel that our identification of Firefly as a production target fits our overall strategy whereby we seek out assets with relative near-term production potential. The fact that it is less than 75 miles away from Energy Fuels Inc.’s White Mesa mill also adds to this claim group’s appeal.
As outlined in your February, 2014 Corporate Presentation, Anfield is already in production of copper in Chile. Please describe that operation, is it cash flow positive?
Our Chilean copper operation, Aura, consists of eight mining concessions totaling approximately 1,140 hectares. We remain at an early stage as we have yet to exploit most of these concessions. In any case, our production of ore is done via the toll-milling, and our reported copper grades have averaged over 2%. We deliver our copper ore to a government-owned agency, Enami, for which we receive a copper price which is at a discount to the copper spot price. Enami’s sole mandate is to facilitate the operations of small and medium-sized mining companies in Chile. At the moment, this practice is beneficial to us, especially given both the high cost of energy in Chile and the paucity of water available for mining. Moreover, we have no need to incur the significant upfront cap-ex to build out a full mining operation. While we are currently generating revenue at Aura, it is a break-even business at the moment.
How much upside is possible from the Chilean copper business? What are the plans to grow this segment and how will growth be funded?
We believe that there is significant upside to our Chilean operations. Our current agreement with Enami allows us to deliver to it up to 4,000 tons of copper ore per month per concession, or 32,000 tons per month overall. At the moment, we are operating at less than 10% of one concession’s capacity. If we were to apply a conservative per-ton price of $75 to our maximized capacity, theoretically we could generate $2.4 million per month in revenue. Of note: if we were able to consistently meet our 4,000 ton per month threshold, we could negotiate a higher monthly capacity tonnage figure with Enami. For example, there are parties which deliver 10,000 tons to Enami on a monthly basis. In any case, our plan is to invest in personnel first, in order to ramp up near-term production (given that much of the work is labor-intensive), then increase our geological work on our concessions, then invest in equipment as we scale up our operations. We will look to fund operations via both internal revenue generation and publicly-raised funds.
Switching to the U.S., please describe Anfield’s Arizona copper assets and the opportunity there…
We have a development property, located in Arizona’s VMS belt, which consists of two past-producing mines, the Binghampton mine and the Copper Queen mine (with the joint property known as BCQ). These two mines are separated by a mile-wide valley, and have never been owned by the same entity. Extensive litigation between previous owners played a role in the closure of both mines in the 1920s, although exploration on both properties continued for many years after that. Past copper production at Binghampton totaled approximately 8 million lbs at an average grade of 3.1%, while Copper Queen produced approximately 90K lbs at an average grade of 9.95%. It is important to note that the largest mine in the Arizona VMS Belt, the United Verde mine near Jerome, produced 2.5 billion lbs at an average copper grade of 4.36%, so the grades at BCQ are not completely far-fetched.
We feel that there is a significant opportunity to discover a large ore body at BCQ, given past production and the prolific nature of the Arizona VMS Belt. We, therefore, plan to delineate a copper resource estimate at BCQ. To that end, we have signed a Purchase Agreement with a publicly-traded company called Blue Zen Memorial Parks, whose primary shareholder is a Chinese copper manufacturer, which will provide an initial $2M investment for the delineation of a copper resource at BCQ.
You mentioned a recently signed Purchase Agreement with a Chinese partner to jointly develop Anfield’s U.S. copper assets, can you expand upon the importance of this deal?
This deal is important to Anfield for a number of reasons: first, we would receive funds to delineate a copper resource at BCQ, thereby creating a valuation metric by which this asset can be measured; second, assuming a resource of 2 billion lbs or more, Anfield and its partner will jointly fund the project through to production, thereby reducing Anfield’s development costs and risk; and third, our partner has a right of first refusal with regard to the production off-take agreement, and this is crucial as the off-take agreement serves as collateral for loans related to the project cap-ex. Many more advanced resource projects have had difficulty finding off-take partners, so we are in a relatively unique position vis-à-vis our peers.
Given that Arizona is dominated by mining giants like BHP and Freeport-McMoRan, how is it possible that a junior miner like Anfield controls a (potentially) hugely valuable copper play?
Our local knowledge allowed us to move quickly with regard to securing these assets. That said, I think the word, “potentially” is key: we still have to prove to the market that the copper resource is there, and that it is of substantial size, before we receive full credit. If that were to occur, a major mining company may show interest.
Can you give us an overview of Anfield’s uranium assets and strategy?
Anfield currently has 337 uranium mining claims and nine state leases in Utah, along with 24 claims in Arizona. All of these claims and leases lie within a 100-mile radius of the only operating conventional uranium mill in the U.S. – the White Mesa mill – which is based in Utah. This mill is owned by Energy Fuels Inc., a publicly-traded uranium company. Our plan is to essentially replicate our mining practice in Chile, that is, toll mill our ore. Given the proximity to White Mesa, and the low level of capacity utilization at that mill, we believe that there is a real opportunity to generate relatively near-term revenue. To this end, we recently announced that our Firefly Mine Complex in Utah – a claim group which contains three historically-producing uranium mines – will be our initial target to advance into production.
There has been ongoing chatter about a nuclear renaissance taking uranium prices considerably higher, yet the spot price sits near an 8-yr low. Why is Anfield betting on uranium?
As mentioned previously, there are some positive signs in the uranium market which lead us to believe that the market is about to turn: 1) Japan’s renewed commitment to nuclear power; 2) the expiration of the 20-25Mlb/year HEU between Russia and the U.S., and the subsequent need for the U.S. to now buy uranium on the open market; and 3) the commitments being made to nuclear power by a number of developing countries, including oil-rich countries like Saudi Arabia and Kuwait. Nuclear power, after all, is one of the cheapest and cleanest power sources in the world.
Why should an investor who is bullish on uranium buy shares of Anfield instead of a pure-play uranium company like Energy Fuels Inc, Uranerz, Uranium Resources Inc. or UR-Energy?
Our model allows for relatively quick cash flow generation without significant upfront cap-ex, extensive permitting times or follow-on sustaining cap-ex. Moreover, our copper assets serve as a hedge against a potential decline in the uranium price. Finally, it could be argued that our copper and uranium assets are complementary, given that uranium is the source of energy and copper is essential to energy transmission.
What are some key catalysts for investors to watch for over the remainder of the year?
There will be news related to each of our assets, whether it’s the commencement of drilling at BCQ and subsequent drill results, copper production figures and associated revenue out of Chile and advancement of our uranium properties via drilling and/or geophysics on targeted properties.
Thank you once again for your time. Would you like to leave readers with any concluding comments?
We believe that Anfield is a small company with a large opportunity. The fact that we already have copper production and revenue generation out of Chile distinguishes us from many of our peers. Moreover, our prospective JV and off-take agreement with a major Chinese copper manufacturer also makes us unique amongst our peers. Finally, our strategic pursuit of resource assets with relatively near-term revenue-generating potential, such as our uranium assets, will allow us to not only mitigate frequent, and dilutive, external funding but also acquire more attractive assets via internal funding.
Author: Peter Epstein